Vancouver’s seaport is more than a proverbial gateway to the world; it’s a major contributor to the local and national economy.
With the port responsible for $11.9 billion in GDP, 115,300 jobs, and $240 billion worth of exports, it’s a lifeline that keeps money flowing into Canada.
However, when COVID-19 safety measures plunged the world into lockdowns, port activity slowed. As businesses closed, exports took a dive and, more significantly, so too did confidence.
A survey of 823 Canadian exporters carried out in May 2020 found that confidence was at an all-time low. 73 per cent of respondents told Export Development Canada (EDC) they’d been negatively affected by COVID-19. A further 67 per cent were fearful that restrictions and a global recession would continue to bite throughout 2021. These concerns were more than ominous feelings. Stock markets and financial instruments reflected the pessimism among exporters.
Dollar dips in tandem with confidence
Forex charts provided by Nadex™ reveal a dip in fortunes for the Canadian dollar. Users trading forex could witness the ups and downs of 2020 and now, 2021, by utilizing free demo trading accounts when observing the markets.
The $10,000 virtual bankroll allows traders to access live market data and place practice trades on major currency pairs, including USD/CAD. Given the state of play in 2020, that’s an invaluable resource, as nobody could predict the behaviour of the understandably volatile market - a pattern which we are continuing to see. Thus, having the ability to test the waters before making real-money trades was something that many investors took advantage of.
Indeed, as was the case across all financial markets, the Canadian dollar took a hit during the early stages of the pandemic. USD/CAD quotes peaked at 1.45 in early March 2020 before tumbling to 1.30 in August.
Prices have since recovered, however, volatility remains.
That’s not ideal for traders looking to get a handle on the market. More significantly, it’s not suitable for exporters and the economy. Indeed, the sinking value of CAD in 2020 correlates with the lack of confidence among those shipping products to more than 170 countries from the Port of Vancouver. The positive news, however, is that the tide is turning.
Getting through the storm and into calmer waters
Although COVID-19 remains an issue in Vancouver, Canada, and the world at large - confidence is returning.
The latest Trade Confidence Index shows an uptick in positivity. There are still issues, of course. In December 2020, 80 per cent of respondents said that business is lower now than before the pandemic. But, significantly, confidence among exporters has improved. 65 per cent (down from 71 per cent) now say they’re negatively affected by COVID-19 restrictions. Moreover, 23 per cent say sales are up and 26 per cent are identifying new partners. So, while confidence in the industry was at an all-time low, a sense of optimism is returning.
Perhaps the most exciting consequence of the pandemic will be evolution. Although many aim to get back to business as usual (without restrictions) as soon as possible, some are evolving. That could be a positive for Vancouver’s shipping industry and the economy as a whole. Confidence levels may not return to 100 per cent in 2021, but the waters are certainly calmer than they once were. If exporters can look towards new opportunities on the horizon, the industry and the economy may emerge from the latest crisis stronger than before.
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